As a newcomer in Australia, it can be a challenge to get to grips with the country’s cost of living. While you might have been drawn to the high quality of life, outdoor lifestyle and stunning scenery, it’s no surprise that it comes at a high cost. But don’t worry, there are ways to manage this.
At Remitly, we understand that figuring out everyday expenses in a new country can sometimes feel overwhelming. In this article, we’ll explore how Australians cope with living costs, how to budget effectively, and tips for easing financial pressure.
Overview of Australia’s current cost of living
Australia’s cost of living has been on the rise, but that doesn’t mean you need to be stuck overspending. Many new arrivals adapt quickly once they understand the local finance landscape.
The country consistently ranks among the more expensive countries to live in, especially in major cities like Sydney or Brisbane. A few factors that contribute to these high costs include:
- Housing: Rent and property prices can be higher than you might expect, especially with so many people looking for a place. But with some patience and research, you can find a home that fits your budget.
- Utilities: Energy and water bills can creep up, particularly in extreme weather, so it’s good to plan for seasonal changes.
- Groceries and fuel: Everyday essentials like fresh produce and petrol can vary in price, so keeping an eye out for deals can help stretch your budget.
- Interest rate changes: The RBA (Reserve Bank of Australia) adjusts interest rates from time to time, which can affect mortgage payments and financial planning.
Inflation is also a key factor. The Australian Bureau of Statistics (ABS) tracks this through the Consumer Price Index (CPI), which shows that the cost of everyday essentials has been rising in recent years.
Importance of budgeting to cope with rising living expenses
When you’re juggling living costs, a well-structured budget is your best friend. It’s like a roadmap for your money, helping you stay in control and stress-free.
A budget can help you:
- Identify priorities: Decide where to spend and where to cut back.
- Spot overspending: Keep track of the little things like takeaway meals or impulse shopping. These expenses add up quickly.
- Reduce financial stress: Feeling more in control about where your money is going gives you peace of mind and makes life easier in the long run.
Many Australians rely on different budgeting strategies to navigate the cost of living pressure. This could be a simple pen-and-paper method, a digital spreadsheet, or a budgeting app like Raiz or Frollo. The key is to find what works for you so you can make the most of your income each month.
Common budgeting techniques used by Australians
There’s no one-size-fits-all approach to budgeting, but there are a few popular methods people use:
- Envelope system: A cash-based approach where you set aside money for different categories like rent, groceries, and fun. Once an envelope is empty, that’s it for the month, and you’ll have to stick to Vegemite on toast.
- Zero-based budgeting: Every dollar of your income is allocated to a specific expense or savings goal, so nothing goes unaccounted for.
- Automated transfers: Setting up automatic payments for bills and savings means you won’t forget essential expenses or be tempted to spend what you planned to save.
Budgeting isn’t about restrictions. It’s about making sure you have enough for what matters while enjoying life in Australia. With a little planning, you’ll feel more confident managing your finances and settling into your new home.
Why is the cost of living in Australia so high?
As you settle into your new surroundings, if you notice that everyday expenses seem higher than in some other countries, you’re not alone. Australia’s high cost of living isn’t just a coincidence. It’s influenced by several economic, social, and geographic factors that affect many different areas of life, from housing to groceries.
Understanding these different factors can help you organise your expenses and maximise your budget.
Why do things cost more in Australia?
Several factors drive up the cost of living, and Australia’s unique location plays a big role:
- Distance from global markets: Importing goods from other countries means high transportation and storage costs, which are passed on to consumers.
- Wages and worker protections: Fair pay and workplace benefits help workers, but they can also lead to higher production costs for businesses.
- Housing demand: In major states like New South Wales and Victoria, the number of people looking for homes is higher than the number of available properties, which pushes up prices.
What’s driving these prices up even more?
A few important economic factors are making life in Australia more expensive right now:
- Inflation: Prices for goods and services gradually rise over time, but when wages don’t increase at the same pace, people feel the squeeze.
- Consumer demand: A strong economy means more people are spending, which can push prices up faster than businesses can keep up.
- Energy costs: Changes in global energy markets affect electricity and gas prices, which can make utility bills unpredictable.
Will prices go down?
Experts believe that the rise in prices may slow in the coming years, but it depends on a few factors. Rent is expected to stay high in big cities, but better supply chains might help lower grocery costs. Consider keeping an eye on reports from the RBA or the ABS to stay informed.
Even if living costs change, having a solid budget and spending plan can help you feel more prepared as a newcomer in Australia.
Budgeting strategies for life in Australia
Knowing how to manage your finances wisely will help you enjoy Australia and feel more at home. Budgeting strategies will help you keep your expenses under control and minimise any financial stress, especially as you adjust to your new day to day.
The 50/30/20 rule
The 50/30/20 rule is a tried-and-tested approach. It’s a simple way to stay on top of your budget without overcomplicating things.
- 50% of your income goes to essentials like rent, utility bills, and groceries.
- 30% can be used for non-essentials and fun like entertainment, eating out, and hobbies.
- 20% is set aside for saving, investments, or paying off debt.
This method helps you balance your needs, your enjoyment, and planning for your future. The best part is that you can adjust the percentages to fit your personal situation, because no two budgets are the same.
How to manage your housing costs
For most people, rent or mortgage payments are the biggest monthly expense, but there are ways to make housing more affordable:
- Share housing: Consider renting with friends or housemates to help cut down costs on rent and utilities. Plus, it’s a great way to build connections in a new country.
- Look beyond the city centre: Suburbs and regional towns often have cheaper rents while still offering good transport, schools, and amenities.
- Negotiate lease terms: If you’re on good terms with your landlord, ask about renewing your lease without an increase. It doesn’t hurt to try.
How to save money on everyday expenses
When it comes to daily spending, small changes can add up:
- Meal planning: Write a note or spreadsheet with budget-friendly meals for the week. Then, create a grocery list and try to avoid impulse buys. This way, you’ll know exactly what you need to spend and you’re less likely to waste food.
- DIY: Try making your own products and repairing items before buying new. For example, you could try finding a recipe for your favourite brownies and bake them at home.
- Compare prices: Shop around for better deals on mobile plans, internet, and utilities. You’d be surprised how much you can save just by switching providers.
Budgeting doesn’t mean cutting out all the fun. It’s about making smart and thoughtful choices. With a little planning, you’ll feel more confident in your new home.
Practical tips to save money on living costs
These straightforward tips can ease the burden of Australia’s cost of living. Think of them as ways to free up funds for fun activities like weekend trips or family outings, rather than letting all your money go toward bills.
How to keep your expenses under control
- Take care of essential bills first: Paying rent, utilities, and insurance on time helps avoid late fees and keeps your finances stable.
- Buy in bulk when possible: Stocking up on non-perishable groceries during sales or when discounts are available can save money over time.
- Start a small emergency fund: Even setting aside a little each month can give you peace of mind for unexpected expenses.
How to save on transport
Owning a car in Australia can be pricey with fuel, registration, and maintenance costs, but there are budget-friendly alternatives:
- Share rides: Carpooling or using ride-sharing apps with friends or colleagues can help split fuel costs.
- Use public transport: Buses, trains, and trams often have daily or weekly fare caps, so frequent travel won’t cost more than a set limit.
- Walk or cycle: If you live near work or school, this is a great way to save money and stay active.
How to reduce grocery and utility expenses
Groceries and utilities can take up a big chunk of your budget, but small adjustments can lead to big savings:
- Buy seasonal fruits and vegetables: They’re usually fresher, tastier, and cheaper.
- Use energy wisely: Turn off lights when they’re not needed, unplug devices, and check your home for drafts to reduce heating and cooling costs.
- Cook in batches: This can save you money on energy bills and save time from cooking every day.
With a few mindful choices, you can stretch your budget further while still enjoying everything Australia has to offer. Managing costs doesn’t have to feel overwhelming; it’s all about finding what works best for you.
Tools to make budgeting in Australia easier
Whether you need help tracking expenses, comparing bills, or planning for the future, there are plenty of resources to make budgeting simpler and stress-free.
Cost of living calculators
If you’re new to Australia or considering moving to a different city, cost-of-living calculators can help you estimate your monthly expenses. For example, Study Melbourne’s calculator gives an idea of costs like rent, groceries, and public transport in different regions. This can help you plan ahead and avoid surprises.
Budgeting apps and tools
There’s no need to track every dollar manually; these budgeting tools can do the heavy lifting for you:
- Moneysmart Budget Planner: A free tool from the Australian Securities and Investments Commission (ASIC) that helps you break down your household costs.
- Frollo: This app syncs with your bank accounts, categorises your spending, and even warns you if you’re going over budget.
- TrackMySPEND: A simple, beginner-friendly app that gives you a real-time snapshot of your daily expenses.
Where to find financial advice
If you’re feeling stressed about money or dealing with debt, there are free or low-cost services that can help:
- National Debt Helpline: Offers phone support and practical advice to help you get back on top of your finances.
- Community centres: Some local centres run personal finance workshops or provide access to social workers who can guide you through budgeting challenges.
- Independent financial advisers: If you’re looking for long-term financial planning, an adviser can help you set goals for saving, investing, or managing debt.
With the right tools and resources, managing your finances in Australia becomes much easier. Whether you prefer using an app, attending a workshop, or speaking to an expert, there’s support available to help you stay in control of your money and enjoy life in your new Australian home.
And if you need to take care of international money transfers in order to manage your finances, Remitly is here to help.
FAQs
What salary do you need to live comfortably in Australia?
It depends on your lifestyle and location. In major cities, you might need a higher income to cover rent, groceries, and entertainment. Outside city centres, costs drop—the average monthly salary in Australia is 7,427 AUD. So, a single adult living modestly could live comfortably on less, but this is relative to their monthly expenses. Families often need more, given housing and childcare expenses.
How can I reduce the cost of living in Australia?
Use a strategic budget, compare utility and phone providers, and cut back on non-essentials like eating out. Look for affordable housing options, shop smarter for groceries, and use discount or cashback apps. Over time, small changes can lead to big savings.
Why is the cost of living in Australia so high?
Economic factors like inflation, wage standards, and import costs contribute to higher prices for goods and services. Housing demand in popular regions pushes rent and property prices up. There are also global factors like the energy market that can impact utilities and fuel.